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CHAPTER11
RETAILING IN INDIA AND AROUND
THE WORLD
Presented By:
Khushboo Bharati
Lawi Anupam
Mishal Kr. Jaiswal
Pushpdev RaiGITAM INSTITUTE OF INTERNATIONAK
BUSINESSVISAKHAPATNAM
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SKILLS NEEDED FOR ORGANISED
RETAILING
Deciding on stock levels
Deciding on product mix
Deciding on brand mix
Human relations
Customer and employee management
Dealing with regulatory authorities and cost control
Merchandising and supply chain management
Customer service
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RETAIL SECTOR IN INDIASource: IBFE Indian Retail Sector, April 2009.
5th largest retail destination
Ranked 2nd in a GRDI
Estimated to grow from US $ 511 billion
in 2008 to US $ 833 billion in 2013
Retail Industry - CAGR 10 %
Organized Retail - CAGR 40 %
Employs over 8% of workforce
Contributing to over 10% of the country'sGDP
Thoroughly unorganized - 95 %
Organized Retail - 14 to 18 % by 2015
Concept of discount stores catching on
Retail Sales in India
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WeeklyMarketsVillage FairsMelas
ConvenienceStoresMom andhawkers,grocers, Pop /Kiranas
PDS OutletsKhadi StoresCooperatives
Exclusive BrandOutletsHyper/SuperMarketsDepartment StoresShopping Malls
TraditionalReach
GovernmentSupported
Historic/RuralReach
Modern Formats/International
EV LUTI N F INDIANRETAIL
Source ofEntertainmen
t
NeighborhoodStores/Convenie
nce
Availability/Low Costs /Distribution
ShoppingExperience/Efficie
ncy
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MODERNISATION IN INDIAN RETAILING
Experimentation with formats
Store design
Emergence of discount stores
Unorganized retailing is getting organized
RETAIL DEVELOPMENT IN NICs
THAILAND
GREECE
BRAZIL
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Factors Underlying Modernization in Retailing
1. Economic development
2. Improvements in civic situation
3. Changes in consumer needs, attitudes and behaviour
4. Changes in government policies
5. Increased investment in retailing
6. Rise in power of organised retail
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Small is Beautiful : The Case of the
Bookstore that Shrank
Crossword Size Decreased from 5000-10000 sq.ft to
300-1000 sq.ft.
Innovative strategies :
Introduced value-added services like home delivery, with Dial
a-book, Fax-a-book and Email-a-book programmes.
Pioneered the concept of an in-house cafe.
Organises Innovative events
Offers a platform to literary-minded people.
First of the retail bookstores to invest in an ERP.
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Barista Coffee Aims at Number 2 Slot in World
Aims to be the no. 2 retail globally over the next decade.
Strategies implemented :
eDynamic - a Web Solutions partner & expert that had created
a scalable Web Strategy for them.
Effective Supply Chain :
- Use of strategic forecasting techniques.
- Complete SCM in Barista is SAP enabled which helps in
overcoming many complex challenges.
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Perspectives on Retailing from Kishore Biyani,
One of Indias Leading Retail Magnates
Hypermarket concept.
Dirt cheap prices.
FDI in retail :
- Allowed after sometime so that the local players can grow and
be in a position to compete.- International players cannot offer better prices unless they
adopt predatory pricing. ( short term advantage)
- In the long run, customers will pay more.
North is a different and more difficult market than south.
Improve Inventory management.
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Impulsive Buyers: The First 15 Seconds, and
Other Tips for Retailers
Position impulse products at the entrance.
Impulse buying decisions is taken in the first 15 seconds of
entering a retail outlet.
Optimise the sales by the right placement of impulse products.
Differentiate or Die:The New Retail Mantra
Retail Model must be different and difficult to replicate.
Speciality malls would make for a good differentiator.
General format in smaller towns as they are still at a young
stage as far as organised retail is concerned.
Concept must be execution based.
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Developing Profitable Shopping Mall
1. Consumer Needs
2. Site Development
3. Positioning
4. Mall Economics
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Understanding Customer Needs
Defining Target Customer
Very specific & Homogeneous
Taking Demographic & Psychographic Factors
Product/s they Buy & Why Volume & Value of Products
Which Places they visit for buying & When
Mall & Product Selection and Buying Process
Perfect alignment of Mall Concept with Target Segment
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Site Development
Market Potential
Per capita consumption of each product category
Consumer Spends on product categories
Catchment Area (Driving Time) Population of Section A & B % of Population willing totravel
Primary (0 10 min) 50,000 90
Secondary (10 30 min) 1,50,000 60
Tertiary (> 30 min) 5,00,000 25
Location A Location B Location c
Market Potential (1) Rs. 260 mn Rs. 220 mn Rs. 200 mn
Existing Malls (2) 1,00,000 sq. ft. 75,000 sq. ft. 50,000 sq. ft.
Proposed Mall (3) 50,000 sq. ft. 50,000 sq. ft. 50,000 sq. ft.
Expected Sales [1 / (2+3)] Rs. 1733 / sq. ft. Rs. 1760 / sq. ft. Rs. 2000 / sq. ft.
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Site Development (contd.)
Consumer Perspective Lifestyle, Convenience,
Merchandise needs, Ambience
Parking, Accessibility & Timings
Level of service & security etc.
Classification of consumers
The Price / Value Seeker
The Affinity Consumer
The Quality / Service Consumer
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The Role of Competition
Co-Opetition: A Synergistic effect of Coming Together
Stores that build High Customer Traffic
Stores that deal in High Margin Products
Stores that deal in wide range of Products, normally Bought
Together
Stores having Newest and Latest Products / Categories
Stores dealing in FMCG which bring Cash Flows
Category Management:
Site Development (contd.)
Category Location Brand
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Positioning
The positioning of the mall should focus upon:
1. what the mall thinks about its customers.
2. value proposition that it offers.
3. what kind of promise it holds for the customer involved.
4. how to go about achieving what it professes.
The mall is a collection of stores that have a highly focused product /
consumer profile satisfying a narrowly defined need of the consumer.
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Mall identity and image
A clear and concise identity and image of the mall is to
be built in the minds of the consumer.
The mall developer should focus upon :
1. The mall cannot attend to all the needs of all the consumers.2. Site development of the mall.
3. Tenant and trade mix.
4. Anchor store.
Change is the only constant in the world.
Customer is the most unpredictable entity in the business.
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A Successful Mall
1. High level of occupancy.
2. The appropriate market positioning- its about unique
identity and image.
3. Good retail planning and design.
4. Ideal merchandise and tenant mix.
5. Quality tenants and low risk.
6. High rental income and strong growth.
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Mall Economics(2.5 lakh sq.ft)
Cost per Sq. Ft. = Rs. 4,000 (land + construction + int.)
Total Investment = Rs. 100 crores
Selling cost = Rs. 6,500 / sq.ft.
Revenues = Rs. 24 cr p.a. (monthly rental @ 1.25% of SC)
Break Even in 6.5 years
At 80 % occupancy with 30% goes to Anchor Stores
rent from Anchor Stores
Annual revenues = 15.6 crores
Break Even = 13 to 14 years
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Q1. With organized retailing posed to touch 15% - 18% of Indian Retail Industry in
the next decade, what would be the scope for supply chain in retailing ?
Ans: Fierce competition is forcing retailers to respond to changes in the market quickly. This
highlights the growing importance of SCM in managing stock availability. Class products and
brand power no longer guarantee success in the aggressive battles for market share. Thus, it
is important to get closer to customers by understanding what it is they want, when they want
it, where they want it and at what price they want it.
However, SCM in India continues to be perceived as a low value added activity of managing
transportation and warehousing. It is time Indian corporates started thinking about SCM from
a strategic perspective rather than just as an operational issue. We are now moving into anera where supply chains will compete with each other, rather than there being competition
between products and marketing
techniques alone, to ensure that the right goods are available at the right place at the right
time, in the right quantities and at the right cost.
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Q2. growth rate of malls in India is 20 % & with 600+ malls already operating, how
the future malls would position themselves?
Ans. The fast growing and nascent retail industry in India has been a witness to the
introduction of a surfeit of malls across the country in recent years. However, only a few of
them have been a runaway successes; because positioning is the one issue which has not
been given much attention to, which has turned out to be one of the biggest mistakes of the
mall developers.
The positioning of the mall should aim at fulfilling the needs and aspirations of the target
consumers in a way that is superiors to the competitors. A mall should view itself not as a
physical alternative to the regular channels of retail outlets but an experience that goes much
beyond the simple joys of shopping. An overall unified and enriching experience at a price
which the customer is willing to pay should be the objective of the mall. It must strive to gain
the mindshare and the heartshare of the customer.
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Thank You
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